|Barrick Gold CEO Aaron Regent|
Cash costs are expected to be about 10% higher for the company in 2011 at $450-$480 an ounce. Barrick's total costs, that is, factoring in all the company's expenses not just those associated with production, are $750-$800. The industry average is between $900 and $1,050 an ounce. In terms of labor costs, there are limited actions a gold miner can take aside from firing people, hiring less qualified individuals or shutting down mines, none of which Barrick is planning to do. Of its overall cost increase of 10%, labor costs make up 5%. Labor is "a tough one," said Regent. "It's a struggle and there are limitations to what you can do." Labor becomes a particularly difficult issue when it comes to dealing with unions in countries like Argentina, where inflation is 20%. Experts in the mining industry are also in short supply, causing a spike in wages as the leading companies compete for top talent. Barrick is hoping to offset these non-negotiable costs by bringing lower cost mines on stream. Cortez, for example, in North America, produced 1.1 million ounces of gold in 2010 for under $300 an ounce. Regent expects the mine to produce 1.3 million to 1.4 million ounces in 2011 for under $300. "That'll help pull down our overall costs."